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Thursday, March 31, 2011

Where Competition Is Cutting Telecom Costs

Everyone is on the lookout for cost savings these days. One potential area of savings is in your monthly telecom costs. Telecom expenses tend to be be large and murky. It’s well worth your while to wade in and see what you can spot that is ripe for cutting or re-bidding. You should also be aware that there can be huge differences in what you pay depending on where you are located.

We tend to think that the price of goods and services are pretty much the same no matter where you are. You know that’s not true for real estate. It’s also not true for some telecom services. Location means everything. Let’s take a look at why this is.

We get the impression that telephone calls are all priced at a flat rate. That impression comes from the way cellular phone service is sold. You pay a flat rate for a fixed number of minutes each month. It doesn’t matter where you call, within the US and not overseas. A minute is a minute. You can call from your home office or you can call from a hotel in another state and talk to anyone in the country using the same minutes you use for local calls.

Landline services don’t generally work that way. You pay a monthly fee for dial tone and local calls. You typically pay by the minute for state to state long distance calls. There is also something called local long distance or IntraLATA (Local Access and Transport Area). A LATA is a geographical area handled by a particular phone company. These areas may include more than one city or a city and the surrounding rural areas. Prices for IntraLATA calls vary all over the place, with areas served by smaller phone companies typically more expensive than you’ll find in areas served by larger phone companies in more populous areas.

What’s upset the apple cart on this pricing model is the rise of VoIP service providers. Unlike local phone companies that are tied to their customers by dedicated twisted pair copper phone wiring, VoIP is a network service that is transported by the Internet, a private SIP trunk, or an MPLS VPN network. Your VoIP provider can be a Cable operator in your city or a carrier located across the country. Pricing plans can be similar to what you get from the telephone company or they can be unlimited local calling with a flat per minute rate for all long distance, or even a flat rate for unlimited domestic calling. By considering a VoIP solution, you give yourself more options to match your monthly telecom expenses closely with the type of calls you typically make and receive.

Competition in the line services market is even more intense. Here, the price you pay per Mbps for point to point data links or dedicated Internet access varies widely. In general, the closer you are located to the heart of a metropolitan business center, the better the pricing. Out in the country, your options are few and prices are higher.

A new service that has highly attractive bandwidth prices is Ethernet over Copper. Prices for both EoC and T1 lines are now under $300 a month in major cities, but you may get twice the T1 bandwidth for that price using Ethernet over Copper. You also have the ability to get higher bandwidths, such as 10 or 20 Mbps without having to bring in fiber optic service.

One limitation with Ethernet over Copper is that you need to be within about 12,000 feet, a couple of miles or so, of the service provider’s point of presence to qualify for service. That restricts availability to metro areas. So, too, other competing services such as HFC (Hybrid Fiber Coax) and fixed wireless tend to have limited geographical service areas and tend to be found in town much more than farther out.

Regardless of whether you are looking for voice, data or video telecom services, or some combination, competition is greater today than ever before. You may not be aware of many options that have recently become available in your area. One fast and easy way to see if you can save on your monthly telecom expenses is to get competitive quotes for telecom services suitable for your business location. This process is fast, easy and free. You may be able to save more than you think.

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Telexplainer Google+ is a business-to-business service of T1 Rex and was formerly known as "T1 Rex's Business Telecom Explainer." Our mission is to offer technical and business information related to telecommunications and computer networking. We are teamed with Telarus, Inc. as our broker for worldwide telecom services, and are affiliates of other commercial services. Many images are used under license from Animation Factory or courtesy of Wikimedia Commons. Some are available on products from the Gigapacket Tech Store on Zazzle. Written and published by John Shepler. Profile+ You may contact me by sending email to: John (at) Telexplainer.com View John Shepler's profile